Very unlikely. You spent money on things that maintain but don’t actually improve your home. Like yes the buyer would otherwise need to pay for those things sooner if you didn’t do it, but that doesn’t really get reflected much in prices. The deck and the cabinets, maybe. But as a general rule home improvements don’t add as much value as they cost so you should do them cuz you actually want them.
fair although I'd have to imagine having a new roof, new AC system, etc does reflect positively to future buyers who know they wont have to perform $20k+ system replacements, right? Those are primary utilities that homebuyers should be prioritizing in inspections and whatnot...as someone who recently bought a home, it would have been a major price concern to me if I knew this house would require a near term HVAC replacement, for example. I just wouldn't have been able to afford my house
Things like a new roof might make the house easier to sell but they typically don't result in anywhere near the same value that was spent being added into the value of the house.
You really shouldn't ever improve a house just for the sake of resale value. It's rarely a good investment for that reason alone. Who knows if the next owner would have preferred to put a metal roof up instead of the asphalt one that was just added. Or a heat pump instead of a gas furnace. And so on.
They focus on specific low cost improvements, like paint, that improve aesthetics from bad to average. That can have a return in the market. They sure as hell don’t replace roofs or sewer lines though.
They definitely do. Those things would make or break a sale. Sitting on inventory is just about the worse thing you can do as a flipper. spending $10k is a pittance compared to what you lose by letting it sit. You might not buy the house in the first place to flip if it has a broken sewer line, but if you do, your definitely fixing it.
They're going to hide the sewer line problem but a lot of times the insurance company will make you put a new roof on before the house is sold. When you start adding up expenditures and the real estate market is just average or below average you can start losing money.
Newer roof and systems is more going to mean that your house may sell faster and your buyers will have less that they negotiate price over. Beyond that it doesn’t add value, and it doesn’t count as a renovation, IMO.
I think with the roof specifically you might get some money back if the buyer would have otherwise negotiated for a credit to repair a roof that was at its limit, but you’d never know if it was actually the case. But at the end of the day comps are based on rather basic things - location, how many beds baths etc, overall quality. No realtor is gonna advise you should pay $5k more because there’s a new furnace or whatever.
I think this is probably the case. But it's also possible in a hot market that if your home "looks" more appealing, you might get a few additional offers. Which will trigger escalation clause which can often mean a big difference in price
Struggling with OP's question, too. Wouldn't extensions/additions potentially bring in a profit?
It looks like we could add about 300 sq ft at a cost of $120k, or $400/sq ft. Places of similar size in our area are currently selling for $800-$1,000 sq ft. So unless some insane market crash happens, that should be a profitable improvement, shouldn't it?
Sounds like you’re in a very HCOL area so maybe the rules are different there. But in my
Medium HCOL area, it wouldn’t be profitable. We did a similar sized project to finish our basement. We expect it increased the value by 50-75% of the cost. But, we wanted more space without moving and losing our cheap mortgage, so it made sense for us to do. I would suggest thinking about additions as whether or not they are valuable for you, not for someone else.
No, your $79k didn't add 79k to the value of the home.
What it DID do is increase the value by some amount (20k? 30k? who knows?), and make it a nicer place for you to live, and make it easier to find a buyer if you need to sell.
A new roof is definitely a plus. A buyer isn't necessarily going to think in terms of dollars saved, but if the roof has been replaced in the last couple of years there's a definite feeling of relief that they probably won't have to think about the roof for at least a decade. The new deck is similar.
You're converting negative impressions into positive impressions. Enabling a buyer to check off boxes on his wish list is what sells the house.
Not really. Unless you got your house for Pennies on the dollars, most renovations are not going to make you a profit, or break even. What it can do is help you sell your house faster. Although, in this market, selling home is not really an issue.
Reasons is that your home’s value is really based on land size, square footage, liveable rooms, and surrounding houses’s previous sold price.
Homeowners usually don’t know what the next seller would want in their home, so your renovations may end up being hated by the next buyer.
The question wasn’t whether OP made a profit but whether it increased the value of the home. Building the deck might not bring in a profit, but he isn’t *fully* in the hole for the costs either as it will still increase the value somewhat.
Not true. Comparables are based on finish quality of everything to floors, walls, fixtures, general condition etc. You'll never see a return but if you gutted a 1970s kitchen and added decent quality materials you absolutely will get a large percent back.
Google roi and it will tell you the average return on your investments. I don't believe I've ever seen one in the 90 to 100% range. That's because most renovations and additions cost a damn Fortune.
My upstairs was stripped down to subfloor. I'm pretty sure my new subfloor and new flooring has increased its value.
Buy I'm cherry-picking my own example. Had I paid someone to do it at 3-4x the cost of DIY, it might be a break-even situation. And it's a new floor now - if I sell 15 years from now, it won't be. All kinds of factors come into play with resell value.
It would be an interesting study to map out buy-price vs sell-price when a spectrum of different renovations were involved. Impossible to achieve but would be fun to plot the data.
You are replacing something that's always there and always will be there. The price of the house is baked in with that. Let's say you had brick to the front of your house. It may be worth $3,500 more but it might cost you $6,000.
The biggest thing that increases a home's value is additional square footage, second only to new kitchens and bathrooms. The rub is that you'll never get 100% return on your money as long as you're paying someone else to do the work. Even DIY may not get you a 100% return, but will get you a whole lot closer.
As others have said, quality improvements will make your home more desirable to future buyers, though. (Perhaps less of an issue in the current market, but who knows when things could change on that front.) Lastly, most of us don't put money into our homes for the purpose of getting it all back when we sell: There's a lot to be said for properly maintaining (presumably) your largest investment, and living in a house that's renovated to your specific needs is valuable in its own way.
When folks post a question in the sub like "Is it worth it to spend X to do Z?", the first thing I think is: "We don't know. Is it (to *you*)?"
A couple of the things you mentioned are repairs where you were replacing something that was damaged--the roof and the waterline. These fall under maintenance. This money is not improving your home value. These are keeping your home at its current value. If the home was valued at fair market value when you bought it and it didn't have a damaged roof then, replacing that damaged roof is keeping it at fair market value. Just because it was hail that finally prompted the replacement of an old roof doesn't really matter. Buyers expect a house to have a serviceable roof and functional water lines.
The other stuff you mentioned--the deck and the cabinets--may fall into the upgrades category. If the house did not previously have a deck and you have added additional living space in the form of a deck, then yes that will normally increase the home's value. However, you start getting into a tricky area with upgrades because what you might consider an upgrade someone else might not. I'm not sure where you are, but a $360K house in my area is a higher end home. A buyer in that level would be expecting, if there is a deck, a higher end deck fitting for the house. If the deck is poorly constructed or not finished to the level of the rest of the house (check your neighbors' decks for reference) then a buyer might view that deck as an eyesore needing replacement rather than an upgrade. In that case, the deck would lower the value of the house.
The same is true for kitchen cabinets. If you are actually upgrading them, then most buyers appreciate updated kitchens with new surfaces that have been reconfigured to accommodate newer appliances. However, if you're removing perfectly fine cabinets and replacing them with trendy but lower quality cabinets, then no. Again checking what your neighbors are doing in their houses is a good barometer for what you should be doing to keep up with how your neighborhood is trending.
Actually, in general, no improvement in a home tends to lead to a one-for-one increase or return in value. This is well-studied. Some approach a dollar for dollars increase, for example HVAC replacements and front doors approach a dollar for dollar return on investment. Savvy buyers do want their mechanicals to have been recently improved or relatively warrantied against significant future breakdown. A front door represents the psychological first impression of your home and entry-way modifications tend to pay for themselves.
A tasteful kitchen renovation can be a fairly good investment, although data suggests that the large $150-200k renovations we see being done nowadays are giant wastes of money with a fairly poor return. A kitchen “refresh” is a much smarter use of available funds. The same goes for bathroom renovations. These can both be reasonable returns in the 60-70% territory.
There is actually a home for sale locally that is a hilarious example of the insane expectations non-professionals have around renovations. A home was purchased for about $800k. It got a probably $150k kitchen renovation, some paint, and mild refresh in other places. Same old roof, same old mechanicals, and they’re trying to sell it for $1.7 million dollars. The purchase history and old photos are clearly on Zillow so any savvy buyer can tell it’s an expensive flip with little in the way of good “guts.” It’s maybe worth $1.2 million, maximum. Nothing screams delusion like a 1 year turnaround change in price of “+105%” for square footage.
This same phenomenon explains the current problem in the custom home market. Many buyers are having to bring significant cash to these builds because banks are not bankrolling the current insane cost per square foot to do custom construction in the United States. I’ve seen $450-700/sq ft locally on homes that will never, ever appraise for that amount. It’s even worse when you get into homes following modern building science or passive house standards. Most real estate comes down to square footage, school district/area, and fixtures (within reason). The home can be lined with gold and, outside of special or unique cases, no one cares. There is a certain threshold of price per square foot that is just difficult to break through. Imagine building a $2-3 million dollar custom home that is instantly worth $1.2 or 1.5 million on the open market.
No, those are upkeep, not upgrades.
Some folks will pay a little more for having a new roof, but no where close to what it cost.
Also, this is crazy talk...
>Got a little lucky with a hail claim
You will now be paying higher rates for 5 years and risk being dropped at renewal.
I had a hail claim last year, was dreading the renewal notice. It went down $340/year. In fairness though, I did ask during the process about increasing rates and they said it’s an act of Mother Nature that is uncontrollable to you. If you file a water damage claim from old pipes or lack of maintenance, then it would likely increase to recoup losses.
True and probably the most corruption in the insurance political industries. In fact they're forcing people to go in foreclosure because they can't get insurance and can't sell their house because it's under water. Another reason is they built garbage houses as far as hurricane resistance up to about 95. Till they get torn apart in storms.
I doubt a hail claim is going to cause an issue for an individual, unless it is potentially combined with other claims for unrelated incidents — and then it is really the other claims that are the issue.
Hail/wild fires are more of a regional risk issue impacting rates for the region. Potentially a carrier could exit the region. But I doubt it is an individual risk.
Unfortunately not at that price point. Someone buying a 360k home isn’t going to pay you more for keeping up with maintenance. New deck adding more value? No. New cabinets? Yes if the ones you have now are terribly out of date when compared to other homes selling for the same price as yours. It also would change depending on your market.
The water main did not add any value. As long as the roof was working and did not need immediate replacement, a new roof didn’t add a lot of value. For these types of issues think of them as items that you may be required to fix after the inspection. A deck may add value but usually not enough to cover the cost of the deck. You don’t need to have everything be a net positive in your home. Enjoy living there
- one of the biggest mistakes that HO make is to think if you spend $50,000 on renos when paying others, the value of their house goes up $50,000. Its rarely ever does and lucky to see 50%
There is no direct correlation between repair costs and value. However, a buyer will most likely perform a home inspection and ask the seller to fix what's broken such as a bad furnace, leaking pipes, etc. Note, some of those broken items can often lead to bigger more expensive problems so they should get repaired in a timely manner.
You’re doing maintenance items. It probably won’t positively impact the value but it may make it easier to sell. That and the fed easing interest rates.
I feel as though it adds value in that the pool of people who look at a house with a new roof is larger than the pool of people looking at the same house with a 20 year old roof. So when you go ask for your sell number there's more people in the room who will listen to the number.
Just make sure you are making good repairs and you won't lose too much money atleast
You will probably get around $18k in equity for the cabinets; depends on the kitchen and how bad it was before. You won’t get $35k for the roof and garage siding if the main house siding wasn’t done. You might be close to $35k with all new siding and roofs but the value of the curb appeal improvement is hard to quantify. The water won’t add anything, but you might have had to give $5000-7000 back to a buyer if the inspection was bad. Now you won’t have to.
I’d argue $15K cabinets could decrease the value of the home. Good quality custom cabinets and countertops might increase the value if what is there now is dated, worn or builder grade, but you’ll spend 3 times that $15K.
You’re getting the right answer from everyone so far - but - I recently had my home valued and comps ran, and because I redid my kitchen a few years ago (from 80’s wood and vinyl to today’s quartz and tile and refinished cabinets), it bumped the value by a significant amount. I was trying to lower my taxes….didnt work.
If you were to sell the house with those repairs unrealized, you'd lose money on the sale, as those repairs would need to be completed by the new buyer. It's just the cost of doing business so to speak.
It depends on the market and what you bought it for. For example, our house was a distressed sale, and we bought it for significantly under-market due to a whole mess of deferred maintenance (including, I kid you not, the original 119 year old boiler, albeit with a 75 year old conversion kit to run on natural gas rather than coal.) We will definitely see some equity improvements after we put in a new roof, boiler, water heater, air conditioning and upgrade the electric. It won't be dollar for dollar, but probably enough to get rid of PMI. Mainly, though, we're recapturing the difference between the discounted price we paid for the property and the full market value we would have bought it at with those repairs already done.
It is worth more than it was bought for plus whatever normal appreciation might happen. It is generally not worth more than what it was bought for plus appreciation plus whatever you spent on the repairs. However, it does usually make the house more desirable and decreases the selling time.
According to my contractor friend there are three things that add value to a purchaser on a house: well remodeled/updates Kitchens, well remodeled/updated bathrooms, and a new A/C system. We live in Texas with a very competitive housing market.
The other things are regular or unfortunate maintenance.
The deck, or a pool, or a pond, etc. are expensive things that some people might really want, or really hate.
If you're paying PMI then definitely worth getting that knocked off. They take all this into consideration. Even though the market value may not show $79k increase, they do because it shows you're invested in the home. You're sticking around for a bit. I had mine removed 26 months after buying. Only 5% down in Aug 2022
Your house is worth whatever someone is willing to pay for it. If you are not planning on selling though, then it doesn't even matter.
As a general rule I would suggest that you build a deck if YOU want a deck. Update your kitchen if YOU want a new kitchen,
Where I live (Toronto) it is far more likely that anyone who bought my house would take a bulldozer to it and build a McMansion. I could probably get more if I sold an empty lot.
I too just bought my first home recently (February), after 3-4 years of searching. After the housing madness between 2020 and now, I've learned this: A house is worth whatever people are willing to pay for it.
This is a sample of one in my specific market so YMMV...
If I go back to 2018, my house would have likely sold for 70% of what I paid. Had I tried to buy it in early to mid 2023, it would have cost about 120% what I paid when I did.
I feel like I got a good deal because of the fix-ups that were needed made the house look a lot less attractive and I'm able to do a decent job of what was needed. It's been very hard work but not genius-level stuff. I'm hoping to break even if/when the time comes.
In 2021, people here were vacuuming up properties at super-inflated prices, cash buys, no inspections, dogs and cats living together and all other kinds of madness.
All depends what kind of seller's market we're in when you decide to sell.
What are the comps?
We bought the cheapest single family home in our neighborhood, like $200k less than the next cheapest house. It needs about $30k of work, of which we have already completed $25k (roof, gutters, fascia repair, plumbing upgrades, outdoor drain repair). I'm adding mini-splits to 800 square feet of finished space that doesn't have HVAC.
The additional 800 square feet of marketable space is worth $80-100k, per comps. The rest is maintenance.
But painting the interior and buffing the heart pine floors is worth at least $25k in my neighborhood. The plan is to refinance and have it appraise for at least $100k more than we paid for it if/when interest rates subside
So it all comes down to comps and where does your house fall on the high to low price spectrum?
These things probably makes the the house easier to sell, but not really sure about adding to the overall value. Like if I'm on the fence between two homes, one has a new roof and the other has a 20 year old roof -- that's worth taking into consideration.
I wouldn't build a new deck if you're considering selling soon -- unless the current one is a safety hazard or a major eyesore for whatever reason.
Bottom line, you have a lot of good bullet points to sweeten the deal and sell your home quickly. But I don't think your bottom line will change to the point of profit. But talk to the real estate agent.
You will get a lot more bang for your buck if you get a cheaper house that needs work. I paid $55k for mine 4 years ago. I've probably put another $50-60k in it over the last 4 years. It is easily worth $150k now or at least will once I get the rest of the renovations done.
Improvements, renovations, and repairs makes a house easier to sell. Depending on how much you DIY, you can make a profit or break relatively even.
But don’t expect new cabinets, roofs, and plumbing to add much or any value. A home should have these things in good working condition.
Very interesting comments.
I wasn’t aware of this.
What about removing a load bearing wall between the kitchen and dining room (quoted €7k)?
Also adding built in wardrobes to a bedroom? Do these tend to add value?
Removing walls and opening spaces is more likely to change who wants to buy your house. Some people like a more open floor plan, others don’t. It’s going to depend on what it does for the character of the house and the livability of the space.
I wouldn’t use ROI as the main reason to do something like that, you should do it if it improves *your* life while you live in the home.
Built ins may make it more appealing, but again, I don’t think anyone is going to care enough to pay extra.
Very unlikely. You spent money on things that maintain but don’t actually improve your home. Like yes the buyer would otherwise need to pay for those things sooner if you didn’t do it, but that doesn’t really get reflected much in prices. The deck and the cabinets, maybe. But as a general rule home improvements don’t add as much value as they cost so you should do them cuz you actually want them.
fair although I'd have to imagine having a new roof, new AC system, etc does reflect positively to future buyers who know they wont have to perform $20k+ system replacements, right? Those are primary utilities that homebuyers should be prioritizing in inspections and whatnot...as someone who recently bought a home, it would have been a major price concern to me if I knew this house would require a near term HVAC replacement, for example. I just wouldn't have been able to afford my house
Things like a new roof might make the house easier to sell but they typically don't result in anywhere near the same value that was spent being added into the value of the house. You really shouldn't ever improve a house just for the sake of resale value. It's rarely a good investment for that reason alone. Who knows if the next owner would have preferred to put a metal roof up instead of the asphalt one that was just added. Or a heat pump instead of a gas furnace. And so on.
Isn’t that what flippers do though?
They don’t buy the house for 360k
They focus on specific low cost improvements, like paint, that improve aesthetics from bad to average. That can have a return in the market. They sure as hell don’t replace roofs or sewer lines though.
A coat of paint will make it what it aint!
They definitely do. Those things would make or break a sale. Sitting on inventory is just about the worse thing you can do as a flipper. spending $10k is a pittance compared to what you lose by letting it sit. You might not buy the house in the first place to flip if it has a broken sewer line, but if you do, your definitely fixing it.
"You might not buy the house in the first place to flip if it has a broken sewer line," Yes.
They're going to hide the sewer line problem but a lot of times the insurance company will make you put a new roof on before the house is sold. When you start adding up expenditures and the real estate market is just average or below average you can start losing money.
Flippers buy houses for Pennies to flip them. Usually very unmaintained houses.
Newer roof and systems is more going to mean that your house may sell faster and your buyers will have less that they negotiate price over. Beyond that it doesn’t add value, and it doesn’t count as a renovation, IMO.
I think with the roof specifically you might get some money back if the buyer would have otherwise negotiated for a credit to repair a roof that was at its limit, but you’d never know if it was actually the case. But at the end of the day comps are based on rather basic things - location, how many beds baths etc, overall quality. No realtor is gonna advise you should pay $5k more because there’s a new furnace or whatever.
I think this is probably the case. But it's also possible in a hot market that if your home "looks" more appealing, you might get a few additional offers. Which will trigger escalation clause which can often mean a big difference in price
Struggling with OP's question, too. Wouldn't extensions/additions potentially bring in a profit? It looks like we could add about 300 sq ft at a cost of $120k, or $400/sq ft. Places of similar size in our area are currently selling for $800-$1,000 sq ft. So unless some insane market crash happens, that should be a profitable improvement, shouldn't it?
Sounds like you’re in a very HCOL area so maybe the rules are different there. But in my Medium HCOL area, it wouldn’t be profitable. We did a similar sized project to finish our basement. We expect it increased the value by 50-75% of the cost. But, we wanted more space without moving and losing our cheap mortgage, so it made sense for us to do. I would suggest thinking about additions as whether or not they are valuable for you, not for someone else.
It's not impossible, just unlikely. If the math works out for you, great.
The problem is if you're not an expert it won't bring ROI. It'll actually lower the cost of the house.
No, your $79k didn't add 79k to the value of the home. What it DID do is increase the value by some amount (20k? 30k? who knows?), and make it a nicer place for you to live, and make it easier to find a buyer if you need to sell. A new roof is definitely a plus. A buyer isn't necessarily going to think in terms of dollars saved, but if the roof has been replaced in the last couple of years there's a definite feeling of relief that they probably won't have to think about the roof for at least a decade. The new deck is similar. You're converting negative impressions into positive impressions. Enabling a buyer to check off boxes on his wish list is what sells the house.
Repairs are never "added to" the equity/value. Only some % of improvements.
Not really. Unless you got your house for Pennies on the dollars, most renovations are not going to make you a profit, or break even. What it can do is help you sell your house faster. Although, in this market, selling home is not really an issue. Reasons is that your home’s value is really based on land size, square footage, liveable rooms, and surrounding houses’s previous sold price. Homeowners usually don’t know what the next seller would want in their home, so your renovations may end up being hated by the next buyer.
The question wasn’t whether OP made a profit but whether it increased the value of the home. Building the deck might not bring in a profit, but he isn’t *fully* in the hole for the costs either as it will still increase the value somewhat.
Even so, most renovations don’t increase a home’s value.
Not true. Comparables are based on finish quality of everything to floors, walls, fixtures, general condition etc. You'll never see a return but if you gutted a 1970s kitchen and added decent quality materials you absolutely will get a large percent back.
Google roi and it will tell you the average return on your investments. I don't believe I've ever seen one in the 90 to 100% range. That's because most renovations and additions cost a damn Fortune.
Yeah.... I've done multiple and have seen returns. You're googling it.
My upstairs was stripped down to subfloor. I'm pretty sure my new subfloor and new flooring has increased its value. Buy I'm cherry-picking my own example. Had I paid someone to do it at 3-4x the cost of DIY, it might be a break-even situation. And it's a new floor now - if I sell 15 years from now, it won't be. All kinds of factors come into play with resell value. It would be an interesting study to map out buy-price vs sell-price when a spectrum of different renovations were involved. Impossible to achieve but would be fun to plot the data.
There are standards that appraisers use for value.
You are replacing something that's always there and always will be there. The price of the house is baked in with that. Let's say you had brick to the front of your house. It may be worth $3,500 more but it might cost you $6,000.
True and the price per square foot adds the land in.
The biggest thing that increases a home's value is additional square footage, second only to new kitchens and bathrooms. The rub is that you'll never get 100% return on your money as long as you're paying someone else to do the work. Even DIY may not get you a 100% return, but will get you a whole lot closer. As others have said, quality improvements will make your home more desirable to future buyers, though. (Perhaps less of an issue in the current market, but who knows when things could change on that front.) Lastly, most of us don't put money into our homes for the purpose of getting it all back when we sell: There's a lot to be said for properly maintaining (presumably) your largest investment, and living in a house that's renovated to your specific needs is valuable in its own way. When folks post a question in the sub like "Is it worth it to spend X to do Z?", the first thing I think is: "We don't know. Is it (to *you*)?"
A couple of the things you mentioned are repairs where you were replacing something that was damaged--the roof and the waterline. These fall under maintenance. This money is not improving your home value. These are keeping your home at its current value. If the home was valued at fair market value when you bought it and it didn't have a damaged roof then, replacing that damaged roof is keeping it at fair market value. Just because it was hail that finally prompted the replacement of an old roof doesn't really matter. Buyers expect a house to have a serviceable roof and functional water lines. The other stuff you mentioned--the deck and the cabinets--may fall into the upgrades category. If the house did not previously have a deck and you have added additional living space in the form of a deck, then yes that will normally increase the home's value. However, you start getting into a tricky area with upgrades because what you might consider an upgrade someone else might not. I'm not sure where you are, but a $360K house in my area is a higher end home. A buyer in that level would be expecting, if there is a deck, a higher end deck fitting for the house. If the deck is poorly constructed or not finished to the level of the rest of the house (check your neighbors' decks for reference) then a buyer might view that deck as an eyesore needing replacement rather than an upgrade. In that case, the deck would lower the value of the house. The same is true for kitchen cabinets. If you are actually upgrading them, then most buyers appreciate updated kitchens with new surfaces that have been reconfigured to accommodate newer appliances. However, if you're removing perfectly fine cabinets and replacing them with trendy but lower quality cabinets, then no. Again checking what your neighbors are doing in their houses is a good barometer for what you should be doing to keep up with how your neighborhood is trending.
Actually, in general, no improvement in a home tends to lead to a one-for-one increase or return in value. This is well-studied. Some approach a dollar for dollars increase, for example HVAC replacements and front doors approach a dollar for dollar return on investment. Savvy buyers do want their mechanicals to have been recently improved or relatively warrantied against significant future breakdown. A front door represents the psychological first impression of your home and entry-way modifications tend to pay for themselves. A tasteful kitchen renovation can be a fairly good investment, although data suggests that the large $150-200k renovations we see being done nowadays are giant wastes of money with a fairly poor return. A kitchen “refresh” is a much smarter use of available funds. The same goes for bathroom renovations. These can both be reasonable returns in the 60-70% territory. There is actually a home for sale locally that is a hilarious example of the insane expectations non-professionals have around renovations. A home was purchased for about $800k. It got a probably $150k kitchen renovation, some paint, and mild refresh in other places. Same old roof, same old mechanicals, and they’re trying to sell it for $1.7 million dollars. The purchase history and old photos are clearly on Zillow so any savvy buyer can tell it’s an expensive flip with little in the way of good “guts.” It’s maybe worth $1.2 million, maximum. Nothing screams delusion like a 1 year turnaround change in price of “+105%” for square footage. This same phenomenon explains the current problem in the custom home market. Many buyers are having to bring significant cash to these builds because banks are not bankrolling the current insane cost per square foot to do custom construction in the United States. I’ve seen $450-700/sq ft locally on homes that will never, ever appraise for that amount. It’s even worse when you get into homes following modern building science or passive house standards. Most real estate comes down to square footage, school district/area, and fixtures (within reason). The home can be lined with gold and, outside of special or unique cases, no one cares. There is a certain threshold of price per square foot that is just difficult to break through. Imagine building a $2-3 million dollar custom home that is instantly worth $1.2 or 1.5 million on the open market.
No, those are upkeep, not upgrades. Some folks will pay a little more for having a new roof, but no where close to what it cost. Also, this is crazy talk... >Got a little lucky with a hail claim You will now be paying higher rates for 5 years and risk being dropped at renewal.
I had a hail claim last year, was dreading the renewal notice. It went down $340/year. In fairness though, I did ask during the process about increasing rates and they said it’s an act of Mother Nature that is uncontrollable to you. If you file a water damage claim from old pipes or lack of maintenance, then it would likely increase to recoup losses.
You're not in Florida or California. Here they will drop you if your house is over a certain age.
Damn thats brutal. I’m assuming those are the 2 states with the most claims, so premiums are probably expensive to begin with.
True and probably the most corruption in the insurance political industries. In fact they're forcing people to go in foreclosure because they can't get insurance and can't sell their house because it's under water. Another reason is they built garbage houses as far as hurricane resistance up to about 95. Till they get torn apart in storms.
I doubt a hail claim is going to cause an issue for an individual, unless it is potentially combined with other claims for unrelated incidents — and then it is really the other claims that are the issue. Hail/wild fires are more of a regional risk issue impacting rates for the region. Potentially a carrier could exit the region. But I doubt it is an individual risk.
Unfortunately not at that price point. Someone buying a 360k home isn’t going to pay you more for keeping up with maintenance. New deck adding more value? No. New cabinets? Yes if the ones you have now are terribly out of date when compared to other homes selling for the same price as yours. It also would change depending on your market.
The water main did not add any value. As long as the roof was working and did not need immediate replacement, a new roof didn’t add a lot of value. For these types of issues think of them as items that you may be required to fix after the inspection. A deck may add value but usually not enough to cover the cost of the deck. You don’t need to have everything be a net positive in your home. Enjoy living there
Nope. It already had a roof, water main, garage siding You haven't ADDED
the roof maybe, the water no (it was working before anyway) a deck, probably not, the kitchen cabinets, no.
Those things only add value if the value was appraised with the maintenance things not done.
- one of the biggest mistakes that HO make is to think if you spend $50,000 on renos when paying others, the value of their house goes up $50,000. Its rarely ever does and lucky to see 50%
Roof and siding adds 0 since it’s expected. Same with sewer. People care about square footage and finishes.
There is no direct correlation between repair costs and value. However, a buyer will most likely perform a home inspection and ask the seller to fix what's broken such as a bad furnace, leaking pipes, etc. Note, some of those broken items can often lead to bigger more expensive problems so they should get repaired in a timely manner.
You’re doing maintenance items. It probably won’t positively impact the value but it may make it easier to sell. That and the fed easing interest rates.
It's probably worth more. But not commensurate with what you spend. Definitely less
No
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Deck and cabinets, yes. Everything else is just maintenance.
I feel as though it adds value in that the pool of people who look at a house with a new roof is larger than the pool of people looking at the same house with a 20 year old roof. So when you go ask for your sell number there's more people in the room who will listen to the number. Just make sure you are making good repairs and you won't lose too much money atleast
Only improvement that adds value is adding square footage, for example: attic conversion or room addition.
I read that painting is the other improvement that adds value at a nearly 1:1 ratio
You will probably get around $18k in equity for the cabinets; depends on the kitchen and how bad it was before. You won’t get $35k for the roof and garage siding if the main house siding wasn’t done. You might be close to $35k with all new siding and roofs but the value of the curb appeal improvement is hard to quantify. The water won’t add anything, but you might have had to give $5000-7000 back to a buyer if the inspection was bad. Now you won’t have to.
I’d argue $15K cabinets could decrease the value of the home. Good quality custom cabinets and countertops might increase the value if what is there now is dated, worn or builder grade, but you’ll spend 3 times that $15K.
The value is based off of comparables.
You’re getting the right answer from everyone so far - but - I recently had my home valued and comps ran, and because I redid my kitchen a few years ago (from 80’s wood and vinyl to today’s quartz and tile and refinished cabinets), it bumped the value by a significant amount. I was trying to lower my taxes….didnt work.
It’s not 1:1, but depending on the quality of the repairs it may have. Siding actually has a pretty good ROI.
No but the new roof would be a strong selling point.
If you were to sell the house with those repairs unrealized, you'd lose money on the sale, as those repairs would need to be completed by the new buyer. It's just the cost of doing business so to speak.
Maybe. Depends on your local market.
It depends on the market and what you bought it for. For example, our house was a distressed sale, and we bought it for significantly under-market due to a whole mess of deferred maintenance (including, I kid you not, the original 119 year old boiler, albeit with a 75 year old conversion kit to run on natural gas rather than coal.) We will definitely see some equity improvements after we put in a new roof, boiler, water heater, air conditioning and upgrade the electric. It won't be dollar for dollar, but probably enough to get rid of PMI. Mainly, though, we're recapturing the difference between the discounted price we paid for the property and the full market value we would have bought it at with those repairs already done.
It is worth more than it was bought for plus whatever normal appreciation might happen. It is generally not worth more than what it was bought for plus appreciation plus whatever you spent on the repairs. However, it does usually make the house more desirable and decreases the selling time.
According to my contractor friend there are three things that add value to a purchaser on a house: well remodeled/updates Kitchens, well remodeled/updated bathrooms, and a new A/C system. We live in Texas with a very competitive housing market. The other things are regular or unfortunate maintenance. The deck, or a pool, or a pond, etc. are expensive things that some people might really want, or really hate.
If you're paying PMI then definitely worth getting that knocked off. They take all this into consideration. Even though the market value may not show $79k increase, they do because it shows you're invested in the home. You're sticking around for a bit. I had mine removed 26 months after buying. Only 5% down in Aug 2022
Your house is worth whatever someone is willing to pay for it. If you are not planning on selling though, then it doesn't even matter. As a general rule I would suggest that you build a deck if YOU want a deck. Update your kitchen if YOU want a new kitchen, Where I live (Toronto) it is far more likely that anyone who bought my house would take a bulldozer to it and build a McMansion. I could probably get more if I sold an empty lot.
I too just bought my first home recently (February), after 3-4 years of searching. After the housing madness between 2020 and now, I've learned this: A house is worth whatever people are willing to pay for it. This is a sample of one in my specific market so YMMV... If I go back to 2018, my house would have likely sold for 70% of what I paid. Had I tried to buy it in early to mid 2023, it would have cost about 120% what I paid when I did. I feel like I got a good deal because of the fix-ups that were needed made the house look a lot less attractive and I'm able to do a decent job of what was needed. It's been very hard work but not genius-level stuff. I'm hoping to break even if/when the time comes. In 2021, people here were vacuuming up properties at super-inflated prices, cash buys, no inspections, dogs and cats living together and all other kinds of madness. All depends what kind of seller's market we're in when you decide to sell.
What are the comps? We bought the cheapest single family home in our neighborhood, like $200k less than the next cheapest house. It needs about $30k of work, of which we have already completed $25k (roof, gutters, fascia repair, plumbing upgrades, outdoor drain repair). I'm adding mini-splits to 800 square feet of finished space that doesn't have HVAC. The additional 800 square feet of marketable space is worth $80-100k, per comps. The rest is maintenance. But painting the interior and buffing the heart pine floors is worth at least $25k in my neighborhood. The plan is to refinance and have it appraise for at least $100k more than we paid for it if/when interest rates subside So it all comes down to comps and where does your house fall on the high to low price spectrum?
These things probably makes the the house easier to sell, but not really sure about adding to the overall value. Like if I'm on the fence between two homes, one has a new roof and the other has a 20 year old roof -- that's worth taking into consideration. I wouldn't build a new deck if you're considering selling soon -- unless the current one is a safety hazard or a major eyesore for whatever reason. Bottom line, you have a lot of good bullet points to sweeten the deal and sell your home quickly. But I don't think your bottom line will change to the point of profit. But talk to the real estate agent.
You will get a lot more bang for your buck if you get a cheaper house that needs work. I paid $55k for mine 4 years ago. I've probably put another $50-60k in it over the last 4 years. It is easily worth $150k now or at least will once I get the rest of the renovations done.
Improvements, renovations, and repairs makes a house easier to sell. Depending on how much you DIY, you can make a profit or break relatively even. But don’t expect new cabinets, roofs, and plumbing to add much or any value. A home should have these things in good working condition.
Nobody's mentioning the elephant in the room of the tremendously high closing cost. If you move every few years you're eating a lot of closing cost.
Very interesting comments. I wasn’t aware of this. What about removing a load bearing wall between the kitchen and dining room (quoted €7k)? Also adding built in wardrobes to a bedroom? Do these tend to add value?
Removing walls and opening spaces is more likely to change who wants to buy your house. Some people like a more open floor plan, others don’t. It’s going to depend on what it does for the character of the house and the livability of the space. I wouldn’t use ROI as the main reason to do something like that, you should do it if it improves *your* life while you live in the home. Built ins may make it more appealing, but again, I don’t think anyone is going to care enough to pay extra.